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Mr. Poddar contended that the CIT has not been able to demonstrate that the sum of Rs.18 crores received by the assessee from the German concern can be treated as an income from business under Section 28 or can be treated as an income from other sources under Section 56. In either case, the principal question is whether the sum of Rs.18 crores received from the German concern is a revenue receipt. He contended that the CIT himself is in doubt as to whether the sum of Rs.18 crores received by the assessee is chargeable and if so, under which Section of the Act. He contended that the receipt has not at all been demonstrated by the CIT to be chargeable to tax. The receipt of the sum of Rs.18 crores from the German concern has the following background :-

The contract between the assessee and the German concern continued for another term of five years after expiry of the initial five years and was thus to come to an end on 31st December, 2005.

Before the contract came to an end on 31st December, 2005, an agreement dated 22nd March, 2005 was entered into between the assessee and the German concern whereunder the German concern agreed to pay a sum of Rs.180 millions for the following reasons appearing from the agreement dated 22nd March, 2005 :-

Therefore, the contentions of the assessee that the receipts can not be taxed as income u/s 28 or 56 are not tenable. Besides, admittedly the amount received is a voluntary payment by BDF as a goodwill gesture. The case laws cited by the assessee are distinguishable on facts. Moreover, it is apparent from the record that the AO did not examine/verify or consider the matter at the time of passing the order."

Mr. Poddar contended that the views expressed by the CIT do not bring the receipt of the sum of Rs.18 crores either within the purview of Section 28 or within the purview of Section 56 of the Act. The contract between the assessee and the German concern was due to expire on 31st December, 2005 without any further exercise on either side. Therefore, it cannot be said, according to him, that this payment of a sum of Rs.18 crores is relatable to the termination of the contract on 31st December, 2005. The stipulations in the agreement dated 22nd March, 2005 that BDF will use the services of the assessee's Waluj plant or that the assessee would be appointed agent for the products to be manufactured by the German concern, are all in the nature of agreements to agree in future. It is nobody's case that the Waluj plant of the assessee was either leased out or licensed to the German concern in consideration whereof the sum of Rs.18 crores was received, nor is it anybody's case that the sum of Rs.18 crores was paid to the assessee because the assessee was proposed to be appointed the agent of the German concern for sale of its goods to be manufactured in future. He submitted that in case the assessee is to be appointed agent of the German concern, in the normal course, in that event, the assessee has to pay and not the other way round. He submitted that the fact that all these stipulations were in the nature of agreement to agree would be evident from the following stipulation appearing from the agreement dated 22nd March, 2005 which provides for a separate agreement as follows:-

We are, at this stage only concerned with the question as to whether the Assessing Officer in allowing the claim of the assessee with respect to the four questions raised by the CIT including the receipt of sum of Rs.18 crores from the German Concern took a possible view of the matter. There was absolutely no attempt on the part of Mr. Nizamuddin to demonstrate that the Assessing Officer did not take a possible view in accepting the contention of the assessee. The parent contract dated 14th September, 1995 did not provide for payment of any compensation or any sum on any account whatsoever. Upon expiry of the contract, the assessee was liable to surrender the technical know-how and to cease to manufacture the goods. The assessee was not entitled in any event, upon expiry of the contract, to prevent the German Concern from setting up its 100% subsidiary for the purpose of manufacturing and marketing its goods. In case the German Concern paid the aforesaid sum for the purpose of securing an NOC from the assessee, even if it is assumed that by agreeing to issue the same the assessee agreed to have his manufacturing and trading structure impaired resulting in loss of his source of income, the receipt in that case according to the views of the Apex Court in the case of Kettlewell Bullen & Co. (supra) would be a capital receipt. If on the other hand it was a gratuitous payment as indicated in the agreement dated 22nd March, 2005 "amounts are being paid by BDF on its own free will" the receipt would still be a capital receipt following the judgment in the case of Divecha (P.H.) vs. CIT (supra).